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Twin Paradoxes of Services Spend Management

Services spend is one of the largest and most complex categories procurement manages, yet many organizations are still struggling with two fundamental challenges: controlling cost and managing supplier performance.

This third annual services spend study from Art of Procurement and SAP draws on responses from 173 procurement leaders across 25 industries and six geographic regions to examine these paradoxes and what procurement can do to close the gap between intention and execution.

In this year's research, more than 60 percent of respondents identified ongoing cost management as a top challenge, while 51.5 percent pointed to supplier performance and quality. The data also reveals a disconnect between what procurement wants to achieve and what they say is happening in practice.

Teams increasingly see outcome-oriented KPIs as a path to better services spend management, but less than half of activity-driven services and of routine services are measured using contractually agreed-upon KPIs and SLAs. Even when performance is measured, few organizations connect those results to how suppliers are paid.

Download this whitepaper to learn:

• Where the disconnect between outcome-oriented KPIs and actual performance measurement persists
• Why measuring supplier performance isn't enough if payment mechanisms aren't aligned with results
• How digital platforms and operating models influence procurement's ability to manage services effectively